《社会保障概论》课程教学资源（课后阅读资料）APSR_Volume112. Issue 4.Nov 2018_When_the_Money_Stops_Fluctuations_in_Financial_Remittances_and_Incumbent_Approval_in_Central_Eastern

American Political Science Review (2018)112.4,758-774 doi:10.1017/S0003055418000485 American Political Science Association 2018 When the Money Stops:Fluctuations in Financial Remittances and Incumbent Approval in Central Eastern Europe,the Caucasus and Central Asia KATERINA TERTYTCHNAYA University of Oxford CATHERINE E.DE VRIES Vrije Universiteit Amsterdam HECTOR SOLAZ Vrije Universiteit Amsterdam DAVID DOYLE University of Oxford Mluctuations in the volume and the value of financial remittances received from abroad affect the livelihood of households in developing economies across the world.Yet,political scientists have little to say about how changes in remittances,as opposed to the receipt of remittance payments alone,affect recipients'political attitudes.Relying on a unique four-wave panel study of Kyrgyz citizens between 2010-2013 and a cross-sectional sample of 28 countries in Central Eastern Europe,the Cauca- sus and Central Asia,we show that when people experience a decrease (increase)in remittances,they become less (more)satisfied about their household economic situation and misattribute responsibility to the incumbent at home.Our findings advance the literature on the political consequences of remit- tance payments and suggest that far from exclusively being an international risk-sharing mechanism for developing countries,remittances can also drive fluctuations in incumbent approval and compromise rudimentary accountability mechanisms in the developing world. INTRODUCTION economists have long been interested in the economic impact of these income transfers.Although a con- or developing world economies,financial remit- tentious debate exists about the relationship between tances,in the form of private-to-private income remittances and economic growth(e.g.Page and Plaza transfers sent by a family member abroad to a 2006),many economists have suggested that remit- relative in their country of origin,are now a major tances act as an important international risk-sharing source of capital.In 2015 alone,worldwide remittances mechanism(e.g.Yang and Choi 2007).This perspective exceeded 601 billion US Dollars and of that amount, 441 billion went to developing countries(Ratha,Eigen- however,is largely based on the assumption that remit- tance payments either remain stable over time,or that Zucchi,and Plaza 2016).This is a sum equivalent to they increase in response to negative shocks in migrant three times the size of all global aid flows.Development sending economies.But what happens if remittance flows suddenly change?How do fluctuations in remit- Katerina Tertytchnaya is a Junior Research Fellow,St Anne's col- tances influence the political attitudes of recipients? lege and Department of Politics and International Relations,Uni- In this study,we explore how fluctuations in remitted versity of Oxford.Manor Road.Oxford OX1 3UQ.United Kingdom income affect support for the incumbent in remittance- (katerina.tertytchnaya@politics.ox.ac.uk). Catherine E.De Vries is a Professor,Department of Politi- receiving countries.Building on a small number of cal Science Public Administration,Vrije Universiteit Amster- studies that have linked remittances to economic dam.De Boelelaan 1055.1081 HV Amsterdam.The Netherlands voting (Bravo 2012;Germano 2013;Ahmed 2017) (c.e.de.vries@vu.nl). and recent work on competence misattribution in Hector Solaz is a Lecturer,John Stuart Mill College,Vrije Uni- versiteit Amsterdam,De Boelelaan 1055,1081 HV Amsterdam,The developing countries (Campello and Zucco 2016), Netherlands(h.solazsantos@vu.nl). we contend that changes in remittances influence David Doyle is an Associate Professor,Department of Politics and economic assessments and incumbent approval in International Relations,University of Oxford,Manor Road,Oxford recipient countries.Specifically,we expect that when OX1 3UQ.United Kingdom (david.doyle@politics.ox.ac.uk). remittance inflows increase.economic evaluations Previous versions of this article were presented at research sem- inars at the Institute of Advanced Studies in Toulouse,the Lon- and incumbent approval will also increase,but when don School of Economics,Pompeu Fabra University and the Uni- these payments decline,recipients will punish incum- versity of California,Los Angeles as well as the Annual Meeting bents.Our argument echoes recent work in economic of the Midwest Political Science Association.The authors would voting that highlights the importance of pocketbook like to thank Jesse Acevedo,Faisal Ahmed,Ben Ansell,Laia Bal- cells,Michael Becher,Tilman Bruck,Elias Dinas,Abel Escriba- assessments for incumbent approval (e.g.Manacorda, Folch,Damir Esenaliev,Aina Gallego,Miriam Golden,Carlo Horz, Miguel,and Vigorito 2011;Pop-Eleches and Pop- Spyros Kosmidis,David Leblang.Lucas Leemann,Barry Maydom. Eleches 2012).By relying on their pocketbooks to Covadonga Meseguer,Lucas Novaes,Karine Van Der Straeten inform their evaluations of government performance Mariken van der Velden,Cesar Zucco as well as four anonymous however.remittance recipients may be rewarding or reviewers and the editor at the American Political Science Review for their constructive comments.Replication files are available at punishing incumbents at home for economic develop- the American Political Science Review Dataverse:https://doi.org/10. ments abroad,in remittance sending economies,that 7910/DVN/MO3KOQ. are largely outside of the incumbent's control. Received:July 13,2017:revised:April 16,2018:accepted:July 5.2018. We are able to test these expectations by leveraging First published online:September 5,2018. a unique four-wave panel study of Kyrgyz citizens 758

American Political Science Review (2018) 112, 4, 758–774 doi:10.1017/S0003055418000485 © American Political Science Association 2018 When the Money Stops: Fluctuations in Financial Remittances and Incumbent Approval in Central Eastern Europe, the Caucasus and Central Asia KATERINA TERTYTCHNAYA University of Oxford CATHERINE E. DE VRIES Vrije Universiteit Amsterdam HECTOR SOLAZ Vrije Universiteit Amsterdam DAVID DOYLE University of Oxford Fluctuations in the volume and the value of financial remittances received from abroad affect the livelihood of households in developing economies across the world. Yet, political scientists have little to say about how changes in remittances, as opposed to the receipt of remittance payments alone, affect recipients’ political attitudes. Relying on a unique four-wave panel study of Kyrgyz citizens between 2010–2013 and a cross-sectional sample of 28 countries in Central Eastern Europe, the Cauca￾sus and Central Asia, we show that when people experience a decrease (increase) in remittances, they become less (more) satisfied about their household economic situation and misattribute responsibility to the incumbent at home. Our findings advance the literature on the political consequences of remit￾tance payments and suggest that far from exclusively being an international risk-sharing mechanism for developing countries, remittances can also drive fluctuations in incumbent approval and compromise rudimentary accountability mechanisms in the developing world. INTRODUCTION For developing world economies, financial remit￾tances, in the form of private-to-private income transfers sent by a family member abroad to a relative in their country of origin, are now a major source of capital. In 2015 alone, worldwide remittances exceeded 601 billion US Dollars and of that amount, 441 billion went to developing countries (Ratha,Eigen￾Zucchi, and Plaza 2016). This is a sum equivalent to three times the size of all global aid flows.Development Katerina Tertytchnaya is a Junior Research Fellow, St Anne’s col￾lege and Department of Politics and International Relations, Uni￾versity of Oxford,Manor Road, Oxford OX1 3UQ, United Kingdom (katerina.tertytchnaya@politics.ox.ac.uk). Catherine E. De Vries is a Professor, Department of Politi￾cal Science & Public Administration, Vrije Universiteit Amster￾dam, De Boelelaan 1055, 1081 HV Amsterdam, The Netherlands (c.e.de.vries@vu.nl). Hector Solaz is a Lecturer, John Stuart Mill College, Vrije Uni￾versiteit Amsterdam, De Boelelaan 1055, 1081 HV Amsterdam, The Netherlands (h.solazsantos@vu.nl). David Doyle is an Associate Professor,Department of Politics and International Relations, University of Oxford, Manor Road, Oxford OX1 3UQ, United Kingdom (david.doyle@politics.ox.ac.uk). Previous versions of this article were presented at research sem￾inars at the Institute of Advanced Studies in Toulouse, the Lon￾don School of Economics, Pompeu Fabra University and the Uni￾versity of California, Los Angeles as well as the Annual Meeting of the Midwest Political Science Association. The authors would like to thank Jesse Acevedo, Faisal Ahmed, Ben Ansell, Laia Bal￾cells, Michael Becher, Tilman Brück, Elias Dinas, Abel Escribà- Folch, Damir Esenaliev, Aina Gallego, Miriam Golden, Carlo Horz, Spyros Kosmidis, David Leblang, Lucas Leemann, Barry Maydom, Covadonga Meseguer, Lucas Novaes, Karine Van Der Straeten, Mariken van der Velden, Cesar Zucco as well as four anonymous reviewers and the editor at the American Political Science Review for their constructive comments. Replication files are available at the American Political Science Review Dataverse: https://doi.org/10. 7910/DVN/MO3KOQ. Received: July 13, 2017; revised: April 16, 2018; accepted: July 5, 2018. First published online: September 5, 2018. economists have long been interested in the economic impact of these income transfers. Although a con￾tentious debate exists about the relationship between remittances and economic growth (e.g. Page and Plaza 2006), many economists have suggested that remit￾tances act as an important international risk-sharing mechanism (e.g. Yang and Choi 2007). This perspective however, is largely based on the assumption that remit￾tance payments either remain stable over time, or that they increase in response to negative shocks in migrant sending economies. But what happens if remittance flows suddenly change? How do fluctuations in remit￾tances influence the political attitudes of recipients? In this study, we explore how fluctuations in remitted income affect support for the incumbent in remittance￾receiving countries. Building on a small number of studies that have linked remittances to economic voting (Bravo 2012; Germano 2013; Ahmed 2017) and recent work on competence misattribution in developing countries (Campello and Zucco 2016), we contend that changes in remittances influence economic assessments and incumbent approval in recipient countries. Specifically, we expect that when remittance inflows increase, economic evaluations and incumbent approval will also increase, but when these payments decline, recipients will punish incum￾bents. Our argument echoes recent work in economic voting that highlights the importance of pocketbook assessments for incumbent approval (e.g. Manacorda, Miguel, and Vigorito 2011; Pop-Eleches and Pop￾Eleches 2012). By relying on their pocketbooks to inform their evaluations of government performance however, remittance recipients may be rewarding or punishing incumbents at home for economic develop￾ments abroad, in remittance sending economies, that are largely outside of the incumbent’s control. We are able to test these expectations by leveraging a unique four-wave panel study of Kyrgyz citizens 758 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:04, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000485

When the Money Stops between 2010-2013 that allows us to carefully identify especially in developing economies characterized how fluctuations in remittances influence economic by high volatility and paucity of information.Ac- assessments and incumbent approval in Kyrgyzstan countability mechanisms however,which are often (Life in Kyrgyzstan,LiK).An additional instrumental rudimentary in these contexts.could erode even variable estimation allows us to address concerns further as a result;it constitutes a form of competence about endogeneity.We bolster the external validity of misattribution (see Campello and Zucco 2017).For our findings by supplementing our analyses with cross- electoral accountability to function properly,voters national data from 28 countries in Central Eastern need to reward,or punish,incumbents for outcomes Europe,the Caucasus and Central Asia covered in for which they are primarily responsible(Kayser and the 2010 European Bank for Reconstruction and Peress 2012).In many ways,investigating whether op//s Development (ERBD)Life in Transition surveys voters update their incumbent evaluations in response (LiTS).The results of our analyses strongly support to fluctuations in remittances provides an excellent test our main theoretical contention:they establish a robust of the misattribution mechanism.Existing research link between fluctuations in remittances,economic argues that remittances are largely outside of the con- assessments and incumbent approval. trol of governments in migrant home countries (Bravo Our findings have a number of important implica- 2012)and when incumbent popularity is shaped by tions.Firstly,while a large literature on the economic remittance inflows from abroad,this may be a political ramifications of remittances exists,there is very little manifestation of economic dependency (e.g.Wibbels work on the political dynamics of these capital inflows. 2006). Having said that,some recent work has begun to We proceed as follows.The next section discusses explore the political effects of remittances at the existing research on the political consequences of national level (Abdih et al.2012:Tyburski 2012: remittances,before presenting the main argument Aparicio and Meseguer 2012;Pfutze 2014;O'Mahony of our work.We then introduce our case selection 2013:Ahmed 2012:Escriba-Folch.Meseguer.and data and analysis of the LiK panel data,and LiTS Wright 2015;Chaudhry 1997;Singer 2012;Doyle cross-sectional surveys.The final section concludes. 2015;Leblang 2017),but we still only have a small number of studies that explore the effect of financial & remittances on individual-level political attitudes and THE POLITICAL CONSEQUENCES OF behavior (Meseguer,Lavezzolo,and Aparicio 2016; REMITTANCES Germano 2013:Bravo 2012).While some of this work has connected remittances to economic voting (Bravo Development economists have long been concerned 2012:Germano 2013:Ahmed 2017).only the work of with the economic effects of remittances.Their work Acevedo(2016)has considered,although not explicitly highlights the role of remittances in reducing poverty tested,how fluctuations in remitted income might illiteracy and infant mortality (for an overview.see affect the political attitudes of recipients with regard Fajnzylber and Lopez 2008).There is also a well- to demand for welfare.No work in political science has documented debate about the effect of remittances on yet examined how fluctuations in remittance inflows economic growth in developing economies (e.g.Page might affect recipients'political attitudes in general, and Plaza 2006).Very little work however,has explored and support for incumbents in particular. the political effects of remittances.We have a vast liter- This article is also relevant for work on economic ature on the political consequences of immigration in voting (e.g.Kramer 1971;Fiorina 1981)and compe- migrant receiving states(e.g.Cornelius and Rosenbulm tence misattribution in developed and developing 2005),but know very little about the political effects countries (e.g.Duch and Stevenson 2008;Healy,Kuo, that remittances might exert on the countries or indi- and Malhotra 2014).While some evidence suggests viduals that receive them. that voters in Europe can disentangle competence Nonetheless.in recent years,a number of stud- from exogenous shocks,i.e.events largely outside of ies have begun to explore the effect of remittances the control of incumbents(Duch and Stevenson 2008), and migration on the politics of remittance receiving, recent work has challenged this assumption for low- and migrant sending,states.This work has demon- information,developing country contexts (Campello strated that remittances can affect exchange rate policy and Zucco 2016).Traditional accounts of economic (Singer 2010),dual citizenship requirements (Leblang voting conclude that rational voters should only 2017),and public accountability (Abdih et al.2012; 四 sanction the incumbent when economic performance Tyburski 2012;Aparicio and Meseguer 2012),to- is the product of government competence (e.g.Duch gether with the linkage strategies adopted by politi- and Stevenson 2008).Yet in developing countries, cal parties,notably clientelism(Pfutze 2014;O'Mahony where party systems are often weak and party labels 2013).Evidence suggests that remittances can prolong have little meaning (Lupu 2016),economic outcomes (Ahmed 2012)and hinder (Escriba-Folch,Meseguer, and assessments,even if largely driven by exogenous and Wright 2015)the survival of autocratic regimes factors,may be the only signal or source of information and they can also shape the level,and type,of gov- about incumbent competence that voters have and ernment expenditures(Chaudhry 1997;Ahmed 2012; may serve as the basis for a calculated economic vote Singer 2012;Doyle 2015).The majority of this work is (Campello and Zucco 2017). at the macro-level Rewarding or punishing incumbents for develop- There are only a few exceptions to this general trend. ments abroad may be a rational strategy for voters, A number of studies have explored the effect of social 759

When the Money Stops between 2010–2013 that allows us to carefully identify how fluctuations in remittances influence economic assessments and incumbent approval in Kyrgyzstan (Life in Kyrgyzstan, LiK). An additional instrumental variable estimation allows us to address concerns about endogeneity. We bolster the external validity of our findings by supplementing our analyses with cross￾national data from 28 countries in Central Eastern Europe, the Caucasus and Central Asia covered in the 2010 European Bank for Reconstruction and Development (ERBD) Life in Transition surveys (LiTS). The results of our analyses strongly support our main theoretical contention; they establish a robust link between fluctuations in remittances, economic assessments and incumbent approval. Our findings have a number of important implica￾tions. Firstly, while a large literature on the economic ramifications of remittances exists, there is very little work on the political dynamics of these capital inflows. Having said that, some recent work has begun to explore the political effects of remittances at the national level (Abdih et al. 2012; Tyburski 2012; Aparicio and Meseguer 2012; Pfutze 2014; O’Mahony 2013; Ahmed 2012; Escribà-Folch, Meseguer, and Wright 2015; Chaudhry 1997; Singer 2012; Doyle 2015; Leblang 2017), but we still only have a small number of studies that explore the effect of financial remittances on individual-level political attitudes and behavior (Meseguer, Lavezzolo, and Aparicio 2016; Germano 2013; Bravo 2012). While some of this work has connected remittances to economic voting (Bravo 2012; Germano 2013; Ahmed 2017), only the work of Acevedo (2016) has considered, although not explicitly tested, how fluctuations in remitted income might affect the political attitudes of recipients with regard to demand for welfare. No work in political science has yet examined how fluctuations in remittance inflows might affect recipients’ political attitudes in general, and support for incumbents in particular. This article is also relevant for work on economic voting (e.g. Kramer 1971; Fiorina 1981) and compe￾tence misattribution in developed and developing countries (e.g. Duch and Stevenson 2008; Healy, Kuo, and Malhotra 2014). While some evidence suggests that voters in Europe can disentangle competence from exogenous shocks, i.e. events largely outside of the control of incumbents (Duch and Stevenson 2008), recent work has challenged this assumption for low￾information, developing country contexts (Campello and Zucco 2016). Traditional accounts of economic voting conclude that rational voters should only sanction the incumbent when economic performance is the product of government competence (e.g. Duch and Stevenson 2008). Yet in developing countries, where party systems are often weak and party labels have little meaning (Lupu 2016), economic outcomes and assessments, even if largely driven by exogenous factors, may be the only signal or source of information about incumbent competence that voters have and may serve as the basis for a calculated economic vote (Campello and Zucco 2017). Rewarding or punishing incumbents for develop￾ments abroad may be a rational strategy for voters, especially in developing economies characterized by high volatility and paucity of information. Ac￾countability mechanisms however, which are often rudimentary in these contexts, could erode even further as a result; it constitutes a form of competence misattribution (see Campello and Zucco 2017). For electoral accountability to function properly, voters need to reward, or punish, incumbents for outcomes for which they are primarily responsible (Kayser and Peress 2012). In many ways, investigating whether voters update their incumbent evaluations in response to fluctuations in remittances provides an excellent test of the misattribution mechanism. Existing research argues that remittances are largely outside of the con￾trol of governments in migrant home countries (Bravo 2012) and when incumbent popularity is shaped by remittance inflows from abroad, this may be a political manifestation of economic dependency (e.g. Wibbels 2006). We proceed as follows. The next section discusses existing research on the political consequences of remittances, before presenting the main argument of our work. We then introduce our case selection, data and analysis of the LiK panel data, and LiTS cross-sectional surveys. The final section concludes. THE POLITICAL CONSEQUENCES OF REMITTANCES Development economists have long been concerned with the economic effects of remittances. Their work highlights the role of remittances in reducing poverty, illiteracy and infant mortality (for an overview, see Fajnzylber and Lopez 2008). There is also a well￾documented debate about the effect of remittances on economic growth in developing economies (e.g. Page and Plaza 2006).Very little work however, has explored the political effects of remittances.We have a vast liter￾ature on the political consequences of immigration in migrant receiving states (e.g. Cornelius and Rosenbulm 2005), but know very little about the political effects that remittances might exert on the countries or indi￾viduals that receive them. Nonetheless, in recent years, a number of stud￾ies have begun to explore the effect of remittances and migration on the politics of remittance receiving, and migrant sending, states. This work has demon￾strated that remittances can affect exchange rate policy (Singer 2010), dual citizenship requirements (Leblang 2017), and public accountability (Abdih et al. 2012; Tyburski 2012; Aparicio and Meseguer 2012), to￾gether with the linkage strategies adopted by politi￾cal parties, notably clientelism (Pfutze 2014;O’Mahony 2013). Evidence suggests that remittances can prolong (Ahmed 2012) and hinder (Escribà-Folch, Meseguer, and Wright 2015) the survival of autocratic regimes and they can also shape the level, and type, of gov￾ernment expenditures (Chaudhry 1997; Ahmed 2012; Singer 2012; Doyle 2015). The majority of this work is at the macro-level. There are only a few exceptions to this general trend. A number of studies have explored the effect of social 759 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:04, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000485

Katerina Tertytchnaya et al. remittances,that is,the norms and ideas that migrants voter evaluations of economic performance:when eco- observe in their host country and transmit to family nomic performance is deemed to be good,incum- members in their country of origin,on individual level bents are rewarded and when economic performance political behavior and preferences (e.g.Levitt 2001) is deemed bad,incumbents are punished or sanctioned This work suggests that social remittances can lead (e.g.Kramer 1971;Fiorina 1981).This economic vot- to higher rates of non-electoral political participation ing model has more sophisticated variants:most no- and more critical evaluations of democracy (Perez- tably,competence models,which argue that voters go Armendariaz and Crow 2010).higher rates of politica beyond a reward-punishment calculus and instead seek activity and political interest (Cordova and Hiskey to select the most competent candidate,based on ex- 2015)and support for a more enhanced role for the pectations developed with the available economic data state(Meseguer,Lavezzolo,and Aparicio 2016). they have observed (e.g.Stigler 1973;for an overview, Less work studies the effect of financial remittances see Duch and Stevenson 2008,12-16).For this rea- on the political behavior and attitudes of those that son,economic voting comes with significant normative receive them.Given the scale of these transfers,in implications.It suggests that even in low-information some contexts they can be as large as the national environments with weak party systems,voters can as- median income,and given that they are generally un- sign responsibility for economic outcomes to the ac- taxed and go directly into the hands of the individ- tions of incumbents,thereby establishing a chain of uals that receive them,this would seem to be an democratic accountability(Stokes 2001).In fact,across oversight,particularly as we now know how important new democracies,evidence suggests that the economic 元 personal economic evaluations can be for electoral be- vote is prevalent from Latin America(Singer 2013)to havior (Kramer 1971:Fiorina 1981:Duch and Steven Africa (Posner and Simon 2002)to Eastern Europe son 2008).While Doyle (2015),Meseguer,Lavezzolo, (Roberts 2008). and Aparicio(2016)and Acevedo(2016)have exam- Voters however,are not always able to establish ined the effect of financial remittances on individual a coherent link between economic outcomes and in- attitudes towards taxation and the state,only three au- cumbent action.Existing research shows that in devel- thors have explicitly linked the receipt of financial re- oping democracies,support for incumbents is largely mittances with the economic vote. determined by economic and political developments In the first study of this kind,Germano (2010) abroad,such as commodity price shocks (e.g.Leigh demonstrated that remittance recipients in Mexican 2009;Monteiro and Ferraz 2012).Focusing on Latin municipalities,due to the transnational social safety net America for example,Campello and Zucco(2016)pro- effect of remittances,are less likely to identify the econ- vide evidence that voters misattribute responsibility omy as a pressing problem relative to non-recipients for economic outcomes to incumbents.They develop and to have fewer economic grievances.Consequently, a 'Good Economic Times'index based on commodity the more positive egocentric and sociotropic outlook prices and US interest rates,which are exogenous to the of remittance recipients means that they are less likely control of Latin American governments.They demon- to oppose incumbent politicians (e.g.Germano 2013) strate that this index can help explain the re-election In a similar vein,Bravo(2012)has demonstrated that of incumbents and presidential popularity.When times in Latin American countries,financial remittances pos- are good,incumbents are rewarded and when times are itively influence presidential approval amongst recip- bad,incumbents are punished. ients and that this effect operates through more fa- In many respects,remittances are an even better test vorable egocentric and sociotropic evaluations of the of attribution in economic voting.Remittances are the economic situation.Ahmed (2017),again for a Latin "epitome of private transfers"(Bravo 2012,6).They American sample,has demonstrated that at high lev- go straight into the hands of the individuals that re- els of dissatisfaction with the incumbent,a remittance ceive them,often get transferred outside of formal recipient is more likely to vote for that incumbent,rela- bank channels,and for many countries in the world, tive to a non-recipient.What is particularly interesting lie largely outside of the incumbent's control.For this about these studies is the fact that,as Bravo(2012)has reason,existing work considers remittances as an excel- suggested,remittances are an exogenous capital flow lent identification strategy to test whether voters hold over which the incumbent government,in most situa- incumbents accountable for events beyond their con- tions,has little control.In this work,remittances appear trol (Bravo 2012).While it is possible for governments to be operating through a mechanism consistent with to control the inflow of remittances,mainly through pocketbook voting effects.It is from these studies that some form of tax on remitted income,or schemes to we take our cue. encourage migrants to remit more,or through manipu- lation of the official exchange rate (e.g.O'Neill 2001) Remittances and Economic Voting the regulation of remittances does not come cheap. One of the largest bodies of work in political science L is concerned with the importance of the economic Examples of taxes on remittances include a five percent tax on re- vote.Beginning with Downs'(1957)classic assertion mittances in Vietnam (which was removed in 1997),a state cross- that individuals will choose parties to best maximize border tax on remittances in Tajikistan(removed in 2003),an over- seas document stamp tax in the Philippines (removed for work their personal utility,work in this vein has demon- ers in 1995)and the tax that the Indian government levies on fees strated that support for the incumbent is based on from money transfer agents,but not on actual remittance flows(e.g. 760

Katerina Tertytchnaya et al. remittances, that is, the norms and ideas that migrants observe in their host country and transmit to family members in their country of origin, on individual level political behavior and preferences (e.g. Levitt 2001). This work suggests that social remittances can lead to higher rates of non-electoral political participation and more critical evaluations of democracy (Pérez￾Armendáriaz and Crow 2010), higher rates of political activity and political interest (Córdova and Hiskey 2015) and support for a more enhanced role for the state (Meseguer, Lavezzolo, and Aparicio 2016). Less work studies the effect of financial remittances on the political behavior and attitudes of those that receive them. Given the scale of these transfers, in some contexts they can be as large as the national median income, and given that they are generally un￾taxed and go directly into the hands of the individ￾uals that receive them, this would seem to be an oversight, particularly as we now know how important personal economic evaluations can be for electoral be￾havior (Kramer 1971; Fiorina 1981; Duch and Steven￾son 2008). While Doyle (2015), Meseguer, Lavezzolo, and Aparicio (2016) and Acevedo (2016) have exam￾ined the effect of financial remittances on individual attitudes towards taxation and the state, only three au￾thors have explicitly linked the receipt of financial re￾mittances with the economic vote. In the first study of this kind, Germano (2010) demonstrated that remittance recipients in Mexican municipalities, due to the transnational social safety net effect of remittances, are less likely to identify the econ￾omy as a pressing problem relative to non-recipients and to have fewer economic grievances. Consequently, the more positive egocentric and sociotropic outlook of remittance recipients means that they are less likely to oppose incumbent politicians (e.g. Germano 2013). In a similar vein, Bravo (2012) has demonstrated that in Latin American countries, financial remittances pos￾itively influence presidential approval amongst recip￾ients and that this effect operates through more fa￾vorable egocentric and sociotropic evaluations of the economic situation. Ahmed (2017), again for a Latin American sample, has demonstrated that at high lev￾els of dissatisfaction with the incumbent, a remittance recipient is more likely to vote for that incumbent, rela￾tive to a non-recipient. What is particularly interesting about these studies is the fact that, as Bravo (2012) has suggested, remittances are an exogenous capital flow, over which the incumbent government, in most situa￾tions, has little control. In this work, remittances appear to be operating through a mechanism consistent with pocketbook voting effects. It is from these studies that we take our cue. Remittances and Economic Voting One of the largest bodies of work in political science is concerned with the importance of the economic vote. Beginning with Downs’ (1957) classic assertion that individuals will choose parties to best maximize their personal utility, work in this vein has demon￾strated that support for the incumbent is based on voter evaluations of economic performance: when eco￾nomic performance is deemed to be good, incum￾bents are rewarded and when economic performance is deemed bad, incumbents are punished or sanctioned (e.g. Kramer 1971; Fiorina 1981). This economic vot￾ing model has more sophisticated variants; most no￾tably, competence models, which argue that voters go beyond a reward-punishment calculus and instead seek to select the most competent candidate, based on ex￾pectations developed with the available economic data they have observed (e.g. Stigler 1973; for an overview, see Duch and Stevenson 2008, 12–16). For this rea￾son, economic voting comes with significant normative implications. It suggests that even in low-information environments with weak party systems, voters can as￾sign responsibility for economic outcomes to the ac￾tions of incumbents, thereby establishing a chain of democratic accountability (Stokes 2001). In fact, across new democracies, evidence suggests that the economic vote is prevalent from Latin America (Singer 2013) to Africa (Posner and Simon 2002) to Eastern Europe (Roberts 2008). Voters however, are not always able to establish a coherent link between economic outcomes and in￾cumbent action. Existing research shows that in devel￾oping democracies, support for incumbents is largely determined by economic and political developments abroad, such as commodity price shocks (e.g. Leigh 2009; Monteiro and Ferraz 2012). Focusing on Latin America for example, Campello and Zucco (2016) pro￾vide evidence that voters misattribute responsibility for economic outcomes to incumbents. They develop a ‘Good Economic Times’ index based on commodity prices and US interest rates,which are exogenous to the control of Latin American governments. They demon￾strate that this index can help explain the re-election of incumbents and presidential popularity.When times are good, incumbents are rewarded and when times are bad, incumbents are punished. In many respects, remittances are an even better test of attribution in economic voting. Remittances are the “epitome of private transfers” (Bravo 2012, 6). They go straight into the hands of the individuals that re￾ceive them, often get transferred outside of formal bank channels, and for many countries in the world, lie largely outside of the incumbent’s control. For this reason, existing work considers remittances as an excel￾lent identification strategy to test whether voters hold incumbents accountable for events beyond their con￾trol (Bravo 2012). While it is possible for governments to control the inflow of remittances, mainly through some form of tax on remitted income, or schemes to encourage migrants to remit more, or through manipu￾lation of the official exchange rate (e.g. O’Neill 2001), the regulation of remittances does not come cheap.1 1 Examples of taxes on remittances include a five percent tax on re￾mittances in Vietnam (which was removed in 1997), a state cross￾border tax on remittances in Tajikistan (removed in 2003), an over￾seas document stamp tax in the Philippines (removed for work￾ers in 1995) and the tax that the Indian government levies on fees from money transfer agents, but not on actual remittance flows (e.g. 760 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:04, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000485

When the Money Stops TABLE 1. Remittances,Economic Assessments,and Support for the President Pocketbook Sociotropic Trust in Trust in Assessments Assessments the President the President Model(1) Model(2) Model(3) Model(4) Remittances 0.135* 0.048* 0.070* 0.056* (0.041) (0.027) (0.032) (0.031) Pocketbook 0.027* (0.005) Sociotropic 0.230# (0.008) Employed 0.122* -0.019 0.026 0.028 (0.022) (0.015) (0.018) (0.017) Education 0.289* 0.015 0.046* 0.035* (0.018) (0.012) (0.014) (0.014) Age -0.005* -0.001 0.005* 0.005* (0.001) (0.000) (0.001) (0.001) Male -0.024 0.010 -0.041 -0.043 (0.020) (0.013) (0.016) (0.016) Wealth 0.288* 0.065* 0.028*4 0.005 (0.007) (0.004) (0.005) (0.005) Rural 0.026 0.039* 0.1214 0.112种 (0.023) (0.015) (0.018) (0.018) Metropolitan -0.042 -0.095* -0.139* -0.116 (0.029) (0.019) (0.022) (0.022) Growth -0.026* 0.027* 0.0514 0.046 (0.015) 0.014) (0.021) (0.019) Constant 3.419*4 2.243* 2.325* 1.718*种 (0.159) (0.147) (0.213) (0.193) Log Likelihood -47618 -36722 -41312 -40778 AIC 95259 73468 82649 81585 BIC 95357 73566 82747 81699 Individuals 25,438 25,438 25,438 25,438 Countries 26 26 26 26 Notes:The table reports coefficients from hierarchical linear models (HLM)with standard errors in parentheses.The baseline category for settlement status(rural and metropolitan)is urban.For more information see Table B.1 and page 13 of the Supporting Information(SI)as well as see Tables C.1-C.3 for robustness checks.significant at p0.01,p.05,p<0.1 level.Source:EBRD Life in Transition Survey (LiTS),2006 Where taxes on remittances have been introduced in Germano 2013;Yang and Choi 2007),thereby increas- the past,they have tended to drive cash flows into in- ing their financial stability and reducing their eco- formal channels and black-market activity (see Moha- nomic grievances (Germano 2013).The net effect of patra et al.2012)and as such,remittances are usually this financial stability and greater consumption power untaxed.For example,in Kyrgyzstan,the case we are is more positive egocentric and sociotropic economic interested in here,the government has not manipulated evaluations.In turn,recipients'evaluations of the in- the exchange rate during the period covered in our data cumbent government will improve.Bravo(2012).Ger- (2010-2013),it has not engaged in any form of remit- mano(2013)and Ahmed(2017)provide evidence that tance incentive scheme,nor has it attempted to tax re- this is exactly what happens in Latin America.Across eys mittance inflows(Slay 2015). the Americas(Bravo 2012;Ahmed 2017),and in Mexi- Focusing on remittance payments alone,an influen- can municipalities(Germano 2013),remittance recipi- tial literature shows that they not only increase the ents exhibit greater support for incumbents relative to general consumable income of households that receive non-recipients,an effect that operates through the pos- them (e.g.Barajas et al.2009),but also provide re- itive egocentric and sociotropic economic evaluations cipients with a social safety net that can insure them of recipients. against economic shocks(Chaudhry 1997;Doyle 2015; We do not take issue with these arguments.We agree that the insurance and consumption effects of remit- tances are likely to increase economic optimism and re- Mohapatra,et al.2012).When Vietnam and Tajikistan removed their sult in support for the incumbent.In fact,in Table 1,we taxes on remittances,official flows significantly increased. broadly follow Bravo's(2012)analysis with data from 761

When the Money Stops TABLE 1. Remittances, Economic Assessments, and Support for the President Pocketbook Sociotropic Trust in Trust in Assessments Assessments the President the President Model (1) Model (2) Model (3) Model (4) Remittances 0.135∗∗∗ 0.048∗ 0.070∗∗ 0.056∗ (0.041) (0.027) (0.032) (0.031) Pocketbook 0.027∗∗∗ (0.005) Sociotropic 0.230∗∗∗ (0.008) Employed 0.122∗∗∗ − 0.019 0.026 0.028 (0.022) (0.015) (0.018) (0.017) Education 0.289∗∗∗ 0.015 0.046∗∗∗ 0.035∗∗∗ (0.018) (0.012) (0.014) (0.014) Age − 0.005∗∗∗ − 0.001 0.005∗∗∗ 0.005∗∗∗ (0.001) (0.000) (0.001) (0.001) Male − 0.024 0.010 − 0.041∗∗∗ − 0.043∗∗∗ (0.020) (0.013) (0.016) (0.016) Wealth 0.288∗∗∗ 0.065∗∗∗ 0.028∗∗∗ 0.005 (0.007) (0.004) (0.005) (0.005) Rural 0.026 0.039∗∗∗ 0.121∗∗∗ 0.112∗∗∗ (0.023) (0.015) (0.018) (0.018) Metropolitan − 0.042 − 0.095∗∗∗ − 0.139∗∗∗ − 0.116∗∗∗ (0.029) (0.019) (0.022) (0.022) Growth − 0.026∗ 0.027∗ 0.051∗∗ 0.046∗∗ (0.015) (0.014) (0.021) (0.019) Constant 3.419∗∗∗ 2.243∗∗∗ 2.325∗∗∗ 1.718∗∗∗ (0.159) (0.147) (0.213) (0.193) Log Likelihood −47618 −36722 −41312 −40778 AIC 95259 73468 82649 81585 BIC 95357 73566 82747 81699 Individuals 25,438 25,438 25,438 25,438 Countries 26 26 26 26 Notes: The table reports coefficients from hierarchical linear models (HLM) with standard errors in parentheses. The baseline category for settlement status (rural and metropolitan) is urban. For more information see Table B.1 and page 13 of the Supporting Information (SI) as well as see Tables C.1-C.3 for robustness checks. ∗∗∗ significant at p ≤ 0.01, ∗∗ p ≤ .05, ∗ p ≤ 0.1 level. Source: EBRD Life in Transition Survey (LiTS), 2006 Where taxes on remittances have been introduced in the past, they have tended to drive cash flows into in￾formal channels and black-market activity (see Moha￾patra et al. 2012) and as such, remittances are usually untaxed. For example, in Kyrgyzstan, the case we are interested in here, the government has not manipulated the exchange rate during the period covered in our data (2010-2013), it has not engaged in any form of remit￾tance incentive scheme, nor has it attempted to tax re￾mittance inflows (Slay 2015). Focusing on remittance payments alone, an influen￾tial literature shows that they not only increase the general consumable income of households that receive them (e.g. Barajas et al. 2009), but also provide re￾cipients with a social safety net that can insure them against economic shocks (Chaudhry 1997; Doyle 2015; Mohapatra, et al. 2012).When Vietnam and Tajikistan removed their taxes on remittances, official flows significantly increased. Germano 2013; Yang and Choi 2007), thereby increas￾ing their financial stability and reducing their eco￾nomic grievances (Germano 2013). The net effect of this financial stability and greater consumption power is more positive egocentric and sociotropic economic evaluations. In turn, recipients’ evaluations of the in￾cumbent government will improve. Bravo (2012), Ger￾mano (2013) and Ahmed (2017) provide evidence that this is exactly what happens in Latin America. Across the Americas (Bravo 2012; Ahmed 2017), and in Mexi￾can municipalities (Germano 2013), remittance recipi￾ents exhibit greater support for incumbents relative to non-recipients, an effect that operates through the pos￾itive egocentric and sociotropic economic evaluations of recipients. We do not take issue with these arguments.We agree that the insurance and consumption effects of remit￾tances are likely to increase economic optimism and re￾sult in support for the incumbent. In fact, in Table 1, we broadly follow Bravo’s (2012) analysis with data from 761 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:04, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000485

Katerina Tertytchnaya et al. 26 countries in Central Eastern Europe.the Caucasus bents.but such effects could also dampen incumbent and Central Asia,drawn from the 2006 wave of the incentives to invest in welfare provisions(Doyle 2015) LiTS2(summary statistics are provided in Section A.2 and encourage governments to divert income into of the Supporting Information (SI)).With a simple di- patronage instead(Ahmed 2012).Declines in remit- chotomous measure of whether a respondent receives tances,caused by downturns in economies abroad,may remittances or not,two-level multilevel models pre- exacerbate economic grievances among the electorate sented in Table 1.demonstrate that,similar to Bravo's and lead to poor evaluations of the incumbent for (2012)results,financial remittances increase satisfac- events not necessarily under their control.In some tion with household (Model 1)and national (Model senses then,the flow of remittances to the developing 2)economic conditions.The effect of remittances on world would appear to be a political manifestation of trust towards the country's president in Model 3 is also economic dependency (e.g.Wibbels 2006). positive,and statistically significant.The effect of re- Moreover,while we agree with Bravo (2012)that mittances on political evaluations in Model 4 remains remittances are an excellent identification strategy to robust,even after we control for economic satisfaction test how individuals attribute responsibility for shocks at the household,and national level (for more infor- to their income and economic security,we think we mation see page 13 of the SI).Yet,what happens when can go one step further.Bravo(2012)argues that the remittance inflows change? bias introduced by unobserved household and individ- ual heterogeneity is likely to bias results downwards, given that those who migrate are most likely to come 元 CHANGES IN REMITTANCES AND INCUMBENT APPROVAL from households with more negative evaluations of the incumbent and status quo.3 Our panel data allows us to Remittances do not always reach recipient households overcome some of the potential sources of bias by em- at the same time and in the same amount,and changes ploying a within-subject design.By limiting our anal- in the frequency and value of remittances will affect ysis to remittance recipients alone,we are also able to the livelihood of households in developing economies address concerns regarding the unobserved differences across the world.During periods of economic contrac- between households that receive remittances and those tion in migrant host economies,remittance payments that do not. are likely to fall due to changing migration flows,cur- rency depreciation,or efforts by migrants to cut costs BACKGROUND AND CASE SELECTION (Mohapatra and Ratha 2010).In the midst of the global financial crisis for example,the World Bank estimated In the ensuing sections,we provide a detailed test of that remittance flows to developing countries declined whether and how fluctuations in remitted income af- by 6 percent between 2008 and 2009.What are the po- fect political attitudes.We first illustrate our argument litical effects of changes in remittance flows? with the case of Kyrgyzstan.Leveraging a unique four- We argue that recipients who experience a decline in wave panel study of Kyrgyz citizens between 2010- remittances become less satisfied with their economic 2013,the LiK surveys,we are able to carefully iden- situation,thereby undermining their support for the tify how changes in remittances affect variation inin- incumbent.Conversely,when remittances increase, cumbent approval.In a second step,we turn to cross- 5.5010 the economic evaluations of recipients will improve, sectional survey data from Central Eastern Europe,the resulting in an increase in incumbent support.In other Caucasus and Central Asia,collected in the aftermath words,remittance recipients are rewarding or punish- of the Great Recession in 2008-2010.Specifically,we ing incumbents for economic developments in migrant rely on the 2010 LiTS that includes survey data for 28 receiving economies that are largely outside of the countries in the region.4 control of politicians at home.While this may be a type Central Eastern Europe,Central Asia,and the Cau- of pocketbook voting,it also represents a form of mis casus provide a useful context for exploring how fluctu- attribution with normative implications for democratic ations in financial remittances affect political attitudes. accountability in remittance dependent states.Punish- For many of the countries in the region,remittances are ing or rewarding incumbents for events outside their one of the most important sources of external financ- control may distort the economic vote as an instrument ing after foreign direct investment.In the mid-2000s of accountability as it will undermine the direct link for example,financial remittances were equivalent to between government action,voters and electoral 20 percent of GDP in Moldova,Bosnia and Herzegov- sanctions (Campello and Zucco 2017).For remittance ina and over 10 percent in Albania and Armenia.Yet, receiving countries,incumbent approval will be subject to economic conditions in countries elsewhere.If coun tercyclical,remittances may'buffer'recipients from the Of course,it is possible that in a global or regional crisis,recipients may experience a decline in their remitted income and still blame vagaries of the economy and bolster support for incum- their government for their perceived role in the wider regional crisis above and beyond any changes in their remittances. The countries included in the analysis are:Albania,Armenia,Azer- 2 These countries are:Albania,Armenia,Azerbaijan,Bosnia- baijan,Belarus,Bosnia-Herzegovina,Bulgaria,Croatia,the Czech Herzegovina,Bulgaria,Croatia,the Czech Republic,Estonia Republic,Estonia,Georgia,Hungary,Kazakhstan,Kosovo,Kyr- Georgia,Hungary,Kazakhstan,Kyrgyzstan,Latvia,Lithuania gyzstan,Latvia,Lithuania,Moldova,Montenegro,FYR Macedo- Moldova,Montenegro,FYR Macedonia,Poland,Romania,Russia, nia.Poland,Romania,Russia.Serbia.Slovakia.Slovenia.Tajikistan Serbia,Slovakia,Slovenia,Tajikistan,Ukraine and Uzbekistan. Ukraine and Uzbekistan. 762

Katerina Tertytchnaya et al. 26 countries in Central Eastern Europe, the Caucasus and Central Asia, drawn from the 2006 wave of the LiTS2 (summary statistics are provided in Section A.2 of the Supporting Information (SI)). With a simple di￾chotomous measure of whether a respondent receives remittances or not, two-level multilevel models pre￾sented in Table 1, demonstrate that, similar to Bravo’s (2012) results, financial remittances increase satisfac￾tion with household (Model 1) and national (Model 2) economic conditions. The effect of remittances on trust towards the country’s president in Model 3 is also positive, and statistically significant. The effect of re￾mittances on political evaluations in Model 4 remains robust, even after we control for economic satisfaction at the household, and national level (for more infor￾mation see page 13 of the SI). Yet, what happens when remittance inflows change? CHANGES IN REMITTANCES AND INCUMBENT APPROVAL Remittances do not always reach recipient households at the same time and in the same amount, and changes in the frequency and value of remittances will affect the livelihood of households in developing economies across the world. During periods of economic contrac￾tion in migrant host economies, remittance payments are likely to fall due to changing migration flows, cur￾rency depreciation, or efforts by migrants to cut costs (Mohapatra and Ratha 2010). In the midst of the global financial crisis for example, the World Bank estimated that remittance flows to developing countries declined by 6 percent between 2008 and 2009. What are the po￾litical effects of changes in remittance flows? We argue that recipients who experience a decline in remittances become less satisfied with their economic situation, thereby undermining their support for the incumbent. Conversely, when remittances increase, the economic evaluations of recipients will improve, resulting in an increase in incumbent support. In other words, remittance recipients are rewarding or punish￾ing incumbents for economic developments in migrant receiving economies that are largely outside of the control of politicians at home.While this may be a type of pocketbook voting, it also represents a form of mis￾attribution with normative implications for democratic accountability in remittance dependent states. Punish￾ing or rewarding incumbents for events outside their control may distort the economic vote as an instrument of accountability as it will undermine the direct link between government action, voters and electoral sanctions (Campello and Zucco 2017). For remittance receiving countries, incumbent approval will be subject to economic conditions in countries elsewhere. If coun￾tercyclical, remittances may ‘buffer’ recipients from the vagaries of the economy and bolster support for incum- 2 These countries are: Albania, Armenia, Azerbaijan, Bosnia￾Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Montenegro, FYR Macedonia, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Tajikistan, Ukraine and Uzbekistan. bents, but such effects could also dampen incumbent incentives to invest in welfare provisions (Doyle 2015) and encourage governments to divert income into patronage instead (Ahmed 2012). Declines in remit￾tances, caused by downturns in economies abroad, may exacerbate economic grievances among the electorate and lead to poor evaluations of the incumbent for events not necessarily under their control. In some senses then, the flow of remittances to the developing world would appear to be a political manifestation of economic dependency (e.g. Wibbels 2006). Moreover, while we agree with Bravo (2012) that remittances are an excellent identification strategy to test how individuals attribute responsibility for shocks to their income and economic security, we think we can go one step further. Bravo (2012) argues that the bias introduced by unobserved household and individ￾ual heterogeneity is likely to bias results downwards, given that those who migrate are most likely to come from households with more negative evaluations of the incumbent and status quo.3 Our panel data allows us to overcome some of the potential sources of bias by em￾ploying a within-subject design. By limiting our anal￾ysis to remittance recipients alone, we are also able to address concerns regarding the unobserved differences between households that receive remittances and those that do not. BACKGROUND AND CASE SELECTION In the ensuing sections, we provide a detailed test of whether and how fluctuations in remitted income af￾fect political attitudes. We first illustrate our argument with the case of Kyrgyzstan. Leveraging a unique four￾wave panel study of Kyrgyz citizens between 2010– 2013, the LiK surveys, we are able to carefully iden￾tify how changes in remittances affect variation in in￾cumbent approval. In a second step, we turn to cross￾sectional survey data from Central Eastern Europe, the Caucasus and Central Asia, collected in the aftermath of the Great Recession in 2008–2010. Specifically, we rely on the 2010 LiTS that includes survey data for 28 countries in the region.4 Central Eastern Europe, Central Asia, and the Cau￾casus provide a useful context for exploring how fluctu￾ations in financial remittances affect political attitudes. For many of the countries in the region, remittances are one of the most important sources of external financ￾ing after foreign direct investment. In the mid-2000s for example, financial remittances were equivalent to 20 percent of GDP in Moldova, Bosnia and Herzegov￾ina and over 10 percent in Albania and Armenia. Yet, 3 Of course, it is possible that in a global or regional crisis, recipients may experience a decline in their remitted income and still blame their government for their perceived role in the wider regional crisis, above and beyond any changes in their remittances. 4 The countries included in the analysis are:Albania,Armenia,Azer￾baijan, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kosovo, Kyr￾gyzstan, Latvia, Lithuania, Moldova, Montenegro, FYR Macedo￾nia, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Tajikistan, Ukraine and Uzbekistan. 762 Downloaded from https://www.cambridge.org/core. 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When the Money Stops FIGURE 1.Fluctuations in remittances inflow(as percentage of GDP)between 2008 and 2009 Serbia Ukraine Montenegro Kosovo Estonia Czech Republic Kazakhstan Russian Federation Belarus Lithuania Slovenia Macadonia,FYR Turkmenistan Poland Slovak Republic Albania Hungary Azerbaijan Romania Bulgaria Kyrgyz Republic Uzbekistan Moldova Tajikistan 4号 -15 -10 0 5 10 2008-2009 Changes in Remittances(as of GDP) Notes:The figure shows changes in the share of personal remittances received as a percentage of a country's overall GDP between 2008 and 2009.Source:World Bank,World Development Indicators. during the Great Recession of 2008-2010,the period ters of 2009,Kyrgyzstan was one of the first coun- from which the survey evidence we rely on is drawn tries to experience the consequences (Mohapatra and remittances became a channel through which the cri- Ratha 2010).According to World Bank estimates, 是 sis was transmitted,not mitigated.The deterioration in 2009,some Central Asian (Kazakhstan,Tajikistan, in the economy of migrant host countries caused of- Kyrgyzstan)and Eastern European countries(Roma- ficial remittance flows in Central Eastern Europe and nia,Moldova)experienced reductions of one half,to Central Asia to fall by 23 percent on average (Ratha, one third,of their 2008 remittance levels.This decline Mohapatra,and Silwal 2010).Relying on World Bank in remitted income recovered,before worsening again. data,Figure 1 provides an overview of how the inflow The overall flow of remittances from Russia increased of remittances(as a percentage of GDP)fluctuated be- from 1008 million US Dollars in 2010 to 1759.7 mil- tween 2008 and 2009 in the region. lion in 2013,before suffering another drop due to the The Kyrgyz economy is one of the most remittance- depreciation of the Russian currency in 2014.Figure 2, dependent economies in the world.From 2011 to 2014, which relies on evidence from the World Bank Devel- the flows of financial remittances were as large as about opment Indicators,summarizes these trends,showing one-third of the country's GDP (World Bank 2017).At how the remittances that Kyrgyzstan received(as a per- the aggregate level,workers'remittances,which repre- centage of the country's GDP)fluctuated during the sent the most important financing flow in the country's period2002-2015. balance of payments,have covered a large part of the In the time-period covered in the LiK surveys be- national trade and budget deficits.In just three years tween 2010 and 2013,the Kyrgyz economy experienced for example,Kyrgyzstan's budget deficit dropped from a period of stable growth.Across all four years,Kyr- eys 13.7 percent of GDP in 2008 to 6.4 percent in 2011(In- gyzstan's GDP was around 6 billion US Dollars.Dur- ternational Monetary Fund 2016). ing the period under analysis,the Kyrgyz government At the same time,dependence on remittances ex- did not engage in any policy to either limit or control poses the Kyrgyz economy to developments abroad. migration,nor any policy to actively encourage remit- especially in Russia,where the largest share of the tances and investment in Kyrgyzstan,such as diaspora country's migrant population seeks employment.It bonds.The Kyrgyz government has never implemented is estimated for example,that about 97 percent of a formal tax on remittances,while the official exchange all remittance flows to Kyrgyzstan originate from the rate is allowed to float freely (Slay 2015).In the second Russian Federation.When remittance outflows from half of 2014.the Central Bank did use official reserves Russia to the Commonwealth of Independent States to prop up the Som-US Dollar exchange rate,which dropped by 33 percent during the first three quar- caused an appreciation of the Som against the Ruble. 763

When the Money Stops FIGURE 1. Fluctuations in remittances inflow (as percentage of GDP) between 2008 and 2009 Notes: The figure shows changes in the share of personal remittances received as a percentage of a country’s overall GDP between 2008 and 2009. Source: World Bank, World Development Indicators. during the Great Recession of 2008–2010, the period from which the survey evidence we rely on is drawn, remittances became a channel through which the cri￾sis was transmitted, not mitigated. The deterioration in the economy of migrant host countries caused of￾ficial remittance flows in Central Eastern Europe and Central Asia to fall by 23 percent on average (Ratha, Mohapatra, and Silwal 2010). Relying on World Bank data, Figure 1 provides an overview of how the inflow of remittances (as a percentage of GDP) fluctuated be￾tween 2008 and 2009 in the region. The Kyrgyz economy is one of the most remittance￾dependent economies in the world. From 2011 to 2014, the flows of financial remittances were as large as about one-third of the country’s GDP (World Bank 2017). At the aggregate level, workers’ remittances, which repre￾sent the most important financing flow in the country’s balance of payments, have covered a large part of the national trade and budget deficits. In just three years for example, Kyrgyzstan’s budget deficit dropped from 13.7 percent of GDP in 2008 to 6.4 percent in 2011 (In￾ternational Monetary Fund 2016). At the same time, dependence on remittances ex￾poses the Kyrgyz economy to developments abroad, especially in Russia, where the largest share of the country’s migrant population seeks employment. It is estimated for example, that about 97 percent of all remittance flows to Kyrgyzstan originate from the Russian Federation. When remittance outflows from Russia to the Commonwealth of Independent States dropped by 33 percent during the first three quar￾ters of 2009, Kyrgyzstan was one of the first coun￾tries to experience the consequences (Mohapatra and Ratha 2010). According to World Bank estimates, in 2009, some Central Asian (Kazakhstan, Tajikistan, Kyrgyzstan) and Eastern European countries (Roma￾nia, Moldova) experienced reductions of one half, to one third, of their 2008 remittance levels. This decline in remitted income recovered, before worsening again. The overall flow of remittances from Russia increased from 1008 million US Dollars in 2010 to 1759.7 mil￾lion in 2013, before suffering another drop due to the depreciation of the Russian currency in 2014. Figure 2, which relies on evidence from the World Bank Devel￾opment Indicators, summarizes these trends, showing how the remittances that Kyrgyzstan received (as a per￾centage of the country’s GDP) fluctuated during the period 2002–2015. In the time-period covered in the LiK surveys be￾tween 2010 and 2013, the Kyrgyz economy experienced a period of stable growth. Across all four years, Kyr￾gyzstan’s GDP was around 6 billion US Dollars. Dur￾ing the period under analysis, the Kyrgyz government did not engage in any policy to either limit or control migration, nor any policy to actively encourage remit￾tances and investment in Kyrgyzstan, such as diaspora bonds.The Kyrgyz government has never implemented a formal tax on remittances, while the official exchange rate is allowed to float freely (Slay 2015). In the second half of 2014, the Central Bank did use official reserves to prop up the Som-US Dollar exchange rate, which caused an appreciation of the Som against the Ruble. 763 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:04, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000485

Katerina Tertytchnaya et al. FIGURE 2.Personal remittances received(as percentage of GDP)in Kyrgyzstan,2002-2015 30 20 10 20022003200420052006200720082009201020112012201320142015 Notes:The figure shows fluctuations in the share of remittances received in Kyrgyzstan as a percentage of the country's GDP in the 2002-2015 period.Source:World Bank,World Development Indicators. This led to an appreciating and overvalued Som-Ruble joyed a period of relative stability as its new parlia- rate and given 90 percent of remittances to Kyrgyzs- mentary system began to function.A new election held tan come from Russia,this had a deleterious effect on in 2011 brought president Atambayev to power with remittance inflows(Slay 2015).However,this occurred an impressive 63 percent of the vote.Although over after the period covered by our panel(2010-2013).In the 2010-2012 period the Kyrgyz parliament produced fact,during the period of our panel remittance inflows four different ruling coalitions,reforms to combat cor- actually increased.What is more,the increasing use of ruption were introduced.The level of corruption in technology,such as mobile and internet transfers,is Kyrgyzstan declined significantly since the ousting of making it even more difficult for governments to ex- former president Bakiyev(Freedom House 2014).The ert control over remittance inflows(Vieira 2017).As stable growth that the Kyrgyz economy experienced such,we think it reasonable to suggest that remittances since 2010,and political renewal in the years covered are largely exogenous in the case of Kyrgyzstan as the in the surveys,stacks the deck against finding declines Kyrgyz government was not actively manipulating or in incumbent trust and support over the 2010 to 2013 controlling remittance inflows. period under investigation here. The period covered in the LiK surveys captures im- portant variation in political developments.In 2010, President Bakiyev was violently overthrown and vi- THE LIFE IN KYRGYZSTAN SURVEYS cious inter-ethnic clashes escalated across the country. The first part of the analysis relies on panel survey data Violent riots in the spring of 2010 were associated with from the 2010,2011,2012 and 2013 waves of the LiK a collapse in trust in government institutions.Accord- survey (Bruck et al.2014).The survey tracks the same ing to evidence from the 2010 LiTS survey,Kyrgyzs- 3,000 households in all seven Kyrgyz oblasts(regions) tan ranked in the bottom ten of transition countries in and the two cities of Bishkek and Osh.The data are terms of trust in the President and the national gov- representative at both the national and regional level. ernment(EBRD 2010,83).Yet,during the same year, 81.6 percent of all 3000 households identified in the Kyrgyzstan adopted a new constitution,and held the original sample in 2010 participated in all four waves. most free and fair election contest that took place in We restrict our sample to adults only (for more infor- Central Asia on record (Freedom House 2010).The mation on the LiK survey see section A1 of the SI). new leadership undertook reforms to liberalize the po- In 2010,10.1 percent of households received financial litical system,combat corruption,and the country en- remittances,12.3 percent in 2011,12.5 percent in 2012 764

Katerina Tertytchnaya et al. FIGURE 2. Personal remittances received (as percentage of GDP) in Kyrgyzstan, 2002 – 2015 Notes: The figure shows fluctuations in the share of remittances received in Kyrgyzstan as a percentage of the country’s GDP in the 2002–2015 period. Source: World Bank, World Development Indicators. This led to an appreciating and overvalued Som-Ruble rate and given 90 percent of remittances to Kyrgyzs￾tan come from Russia, this had a deleterious effect on remittance inflows (Slay 2015). However, this occurred after the period covered by our panel (2010-2013). In fact, during the period of our panel remittance inflows actually increased. What is more, the increasing use of technology, such as mobile and internet transfers, is making it even more difficult for governments to ex￾ert control over remittance inflows (Vieira 2017). As such, we think it reasonable to suggest that remittances are largely exogenous in the case of Kyrgyzstan as the Kyrgyz government was not actively manipulating or controlling remittance inflows. The period covered in the LiK surveys captures im￾portant variation in political developments. In 2010, President Bakiyev was violently overthrown and vi￾cious inter-ethnic clashes escalated across the country. Violent riots in the spring of 2010 were associated with a collapse in trust in government institutions. Accord￾ing to evidence from the 2010 LiTS survey, Kyrgyzs￾tan ranked in the bottom ten of transition countries in terms of trust in the President and the national gov￾ernment (EBRD 2010, 83). Yet, during the same year, Kyrgyzstan adopted a new constitution, and held the most free and fair election contest that took place in Central Asia on record (Freedom House 2010). The new leadership undertook reforms to liberalize the po￾litical system, combat corruption, and the country en￾joyed a period of relative stability as its new parlia￾mentary system began to function. A new election held in 2011 brought president Atambayev to power with an impressive 63 percent of the vote. Although over the 2010–2012 period the Kyrgyz parliament produced four different ruling coalitions, reforms to combat cor￾ruption were introduced. The level of corruption in Kyrgyzstan declined significantly since the ousting of former president Bakiyev (Freedom House 2014). The stable growth that the Kyrgyz economy experienced since 2010, and political renewal in the years covered in the surveys, stacks the deck against finding declines in incumbent trust and support over the 2010 to 2013 period under investigation here. THE LIFE IN KYRGYZSTAN SURVEYS The first part of the analysis relies on panel survey data from the 2010, 2011, 2012 and 2013 waves of the LiK survey (Brück et al. 2014). The survey tracks the same 3,000 households in all seven Kyrgyz oblasts (regions) and the two cities of Bishkek and Osh. The data are representative at both the national and regional level. 81.6 percent of all 3000 households identified in the original sample in 2010 participated in all four waves. We restrict our sample to adults only (for more infor￾mation on the LiK survey see section A1 of the SI). In 2010, 10.1 percent of households received financial remittances, 12.3 percent in 2011, 12.5 percent in 2012 764 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:04, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000485

When the Money Stops and 12.3 percent in 2013.Households received their Remittances(t)subtracts the frequency with which re- remitted income in four different currencies across the mittances were received in wave t-1 from the frequency waves:54.2 percent of households received remittances in wave t for each respondent.Hence,the variable cap- in Kyrgyz Som,39.6 percent in Russian Rubles,5.5 per- tures the change in the frequency with which respon- cent in US Dollars,and 0.7 percent in Euros.Given dents received remittances from abroad between each that we are interested in the political consequences survey wave.The variable Change in Frequency of Re- of fluctuations in remittances,our analyses focus on mittances -(t1)ranges from a minimum value of-5 to a remittance recipients only.Between 2010 and 2011. maximum value of 5 673 percent of remittance recipients experienced a Our third measure relies on changes in a Remittance change in the amount or frequency of money received. Index.This index taps into the degree to which re- 63.6 percent experienced a change between 2012 and mittances are a substantial and reliable source of in- 2011,and 63.1 percent between 2012 and 2013. come.While the continuous measures of remittances We explore the political effects of fluctuations in re- used here are an improvement on categorical measures, mittances by relying on three different measures:1) they might not capture the extent to which these finan- changes in the amount of remitted income received cial flows constitute a substantial and reliable source of between survey waves,2)changes in the frequency income.To overcome some of these issues,Germano of remittances received between survey waves,and 3) (2010)developed the Remittance Index comprised of changes in a Remittance Index that combines informa- three components:the amount,the regularity and the tion about both the amount and regularity of remit- duration of remittances received.The index thus cap- tances (Germano 2010).By moving beyond a simple tures"the extent to which remittances are a substantial. dichotomous measure of receiving remittances or not, reliable,and enduring source of income to the house- these measures allow us to capture important variation hold"(Germano 2010,153).The LiK survey allows in the dynamics of remittance flows. us to capture both the amount and regularity of re- Our first measure captures changes in the amount mittances across all waves.Specifically,we rely on re- 4号元 of remitted income across the different survey waves. spondents'answers to the following questions:'How It relies on respondents'answers to two survey ques- much money did household migrants send over the tions.First,respondents were asked:'During the last last 12 months?'for the amount,and 'Did you receive 12 months,did you receive any money from abroad the money sent by migrants always at the same point sent by migrants who are members of this household?' of time (is the receiving of money regular)?'for reg- Second,respondents who indicated that they received ularity.Regarding the amount of remittances,we re- money sent by migrants were asked 'How much money coded the amount received (in Som)into three cat- did household migrants send over the last 12 months? egories:1)those that received amounts ranging be- The variable Change in Amount of Remittances (-1) tween the minimum and mean value in the respective subtracts the amount of money received in wave t-1 survey wave,2)those that received amounts between from the amount of money received at wave t for each the mean and one standard deviation above the mean respondent.It therefore captures the change in the value in the respective survey wave,and 3)those that amount of remitted income received by each respon- received amounts larger than one standard deviation dent between survey waves.Respondents were asked above the mean value in the respective survey wave. to report the amount of money in the currency in which Regarding the regularity of remittances,respondents they received it,that is to say Kyrgyz Som,Russian could choose between the following answer categories: Rubles,US Dollars,or Euros.In order to ensure that '1)yes,2)no or 3)different (varies).We recoded the the magnitude of changes in the amount of remitted in- answer in the following way:1)no,2)different and 3) come are comparable,we transferred all amounts into yes.In keeping with Germano(2010),we added both Kyrgyz Som by using the average exchange rate over measures to a Remittance Index that takes on a mini- the year (for more detailed information see Table A.4 mum value of 1 and a maximum value of 6(for more of the SI).The variable Change in Amount of Remit- information on the construction of the Remittance In- tances()varies between-23.4 and 35.7i.e.from 234to dex see Table A.5 of the SI).We constructed the vari- 357 thousand Som.With the 2010-2013 average Som to able Change in Remittance Index(1)that subtracts the US Dollar exchange rate,these changes approximately value of the index in wave t-1 from the value of the in- vary between a maximum decrease of 5 and maximum dex in wave t for each respondent.The variable Change increase of 8 thousand US Dollars respectively. in Remittance Index-(1)ranges from a minimum value eys Our second measure captures the changes in the of-5 to a maximum value of 5. frequency with which respondents receive remittances In addition,we construct a dichotomous measure across survey waves.It relies on respondents'answers of declines in remitted income.Reduction in Remit- to the following survey question:'How many times tances.This variable takes on a value of 1 when respon- within the last 12 months did migrants send/bring dents experienced a reduction in the amount and/or money?'This question was asked only to those respon- frequency of remitted income,and 0 if they did not. dents who indicated that they received money from This dichotomous measure allows us to compare the ef- migrants abroad over the last 12 months.Respondents fect of experiencing a reduction in remittances to other were given six answer categories:'1)once,2)2-3 times, household income shocks that respondents were asked 3)4-5 times,4)6-10 times,5)11-12 times,and 6)more about in the Kyrgyz survey,and to check the robustness than 12 times.'The variable Change in Frequency of of our results against matching analyses. 765

When the Money Stops and 12.3 percent in 2013. Households received their remitted income in four different currencies across the waves: 54.2 percent of households received remittances in Kyrgyz Som, 39.6 percent in Russian Rubles, 5.5 per￾cent in US Dollars, and 0.7 percent in Euros. Given that we are interested in the political consequences of fluctuations in remittances, our analyses focus on remittance recipients only. Between 2010 and 2011, 67.3 percent of remittance recipients experienced a change in the amount or frequency of money received, 63.6 percent experienced a change between 2012 and 2011, and 63.1 percent between 2012 and 2013. We explore the political effects of fluctuations in re￾mittances by relying on three different measures: 1) changes in the amount of remitted income received between survey waves, 2) changes in the frequency of remittances received between survey waves, and 3) changes in a Remittance Index that combines informa￾tion about both the amount and regularity of remit￾tances (Germano 2010). By moving beyond a simple dichotomous measure of receiving remittances or not, these measures allow us to capture important variation in the dynamics of remittance flows. Our first measure captures changes in the amount of remitted income across the different survey waves. It relies on respondents’ answers to two survey ques￾tions. First, respondents were asked: ‘During the last 12 months, did you receive any money from abroad sent by migrants who are members of this household?’ Second, respondents who indicated that they received money sent by migrants were asked ‘How much money did household migrants send over the last 12 months?’ The variable Change in Amount of Remittances t-(t-1) subtracts the amount of money received in wave t-1 from the amount of money received at wave t for each respondent. It therefore captures the change in the amount of remitted income received by each respon￾dent between survey waves. Respondents were asked to report the amount of money in the currency in which they received it, that is to say Kyrgyz Som, Russian Rubles, US Dollars, or Euros. In order to ensure that the magnitude of changes in the amount of remitted in￾come are comparable, we transferred all amounts into Kyrgyz Som by using the average exchange rate over the year (for more detailed information see Table A.4 of the SI). The variable Change in Amount of Remit￾tancest-(t-1) varies between -23.4 and 35.7,i.e. from 234 to 357 thousand Som.With the 2010–2013 average Som to US Dollar exchange rate, these changes approximately vary between a maximum decrease of 5 and maximum increase of 8 thousand US Dollars respectively. Our second measure captures the changes in the frequency with which respondents receive remittances across survey waves. It relies on respondents’ answers to the following survey question: ‘How many times within the last 12 months did migrants send/bring money?’ This question was asked only to those respon￾dents who indicated that they received money from migrants abroad over the last 12 months. Respondents were given six answer categories: ‘1) once, 2) 2–3 times, 3) 4–5 times, 4) 6–10 times, 5) 11–12 times, and 6) more than 12 times.’ The variable Change in Frequency of Remittancest-(t-1) subtracts the frequency with which re￾mittances were received in wave t-1 from the frequency in wave t for each respondent. Hence, the variable cap￾tures the change in the frequency with which respon￾dents received remittances from abroad between each survey wave. The variable Change in Frequency of Re￾mittances t-(t-1) ranges from a minimum value of -5 to a maximum value of 5. Our third measure relies on changes in a Remittance Index. This index taps into the degree to which re￾mittances are a substantial and reliable source of in￾come. While the continuous measures of remittances used here are an improvement on categorical measures, they might not capture the extent to which these finan￾cial flows constitute a substantial and reliable source of income. To overcome some of these issues, Germano (2010) developed the Remittance Index comprised of three components: the amount, the regularity and the duration of remittances received. The index thus cap￾tures “the extent to which remittances are a substantial, reliable, and enduring source of income to the house￾hold” (Germano 2010, 153). The LiK survey allows us to capture both the amount and regularity of re￾mittances across all waves. Specifically, we rely on re￾spondents’ answers to the following questions: ‘How much money did household migrants send over the last 12 months?’ for the amount, and ‘Did you receive the money sent by migrants always at the same point of time (is the receiving of money regular)?’ for reg￾ularity. Regarding the amount of remittances, we re￾coded the amount received (in Som) into three cat￾egories: 1) those that received amounts ranging be￾tween the minimum and mean value in the respective survey wave, 2) those that received amounts between the mean and one standard deviation above the mean value in the respective survey wave, and 3) those that received amounts larger than one standard deviation above the mean value in the respective survey wave. Regarding the regularity of remittances, respondents could choose between the following answer categories: ‘1) yes, 2) no or 3) different (varies)’. We recoded the answer in the following way: 1) no, 2) different and 3) yes. In keeping with Germano (2010), we added both measures to a Remittance Index that takes on a mini￾mum value of 1 and a maximum value of 6 (for more information on the construction of the Remittance In￾dex see Table A.5 of the SI). We constructed the vari￾able Change in Remittance Index t-(t-1) that subtracts the value of the index in wave t-1 from the value of the in￾dex in wave t for each respondent.The variable Change in Remittance Index t-(t-1) ranges from a minimum value of -5 to a maximum value of 5. In addition, we construct a dichotomous measure of declines in remitted income, Reduction in Remit￾tances.This variable takes on a value of 1 when respon￾dents experienced a reduction in the amount and/or frequency of remitted income, and 0 if they did not. This dichotomous measure allows us to compare the ef￾fect of experiencing a reduction in remittances to other household income shocks that respondents were asked about in the Kyrgyz survey, and to check the robustness of our results against matching analyses. 765 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:04, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000485

Katerina Tertytchnaya et al. Our main dependent variable asks respondents how RESULTS much they generally trust the president.Relying on this item,we construct a variable,presidential trust, Models 1 through 3 in Table 2 explore the relationship which ranges from 1 to 4,with higher values denot- between changes in remittances and changes in incum- ing greater trust in the president.In line with other bent support.The dependent variable in Models 1 to 3 work.we use trust in the incumbent,here the president. is the difference in levels of trust in the President across as a proxy of incumbent approval (e.g.Williams 1985, survey waves,while our measure of changes in remit- Ahmed 2017).Based on this measure we construct a tances differs across models.Model 1 shows the results variable Change in Trust in the President()by sub- for changes in the amount of remitted income,Model tracting the trust in the president at wave t-1 from trust 2 the results for changes in the frequency with which op//s in the president at wave t.This variable ranges from a respondents receive remittances,and Model 3 the re- minimum value of-3 and a maximum value of 3.Over- sults for changes in our index.All results are based all,we expect to find a positive effect for a change in the on a panel data model that accounts for repeated ob- amount and the frequency of remittances received or in servations of individuals and includes both household the Remittance Index,and a negative effect for reduc. and survey wave fixed effects.The results show that an tions in remittances on change in trust in the president. increase in remittances coincides with an increase in The analyses also include a set of control variables trust in the president,while a decrease in remittances including gender,age,education,marital status,ethnic decreases trust in the president.For example,when a ity,intention to migrate,life satisfaction and attitude respondent experiences a change in remitted income to risk.Controlling for ethnicity in the context of Kyr- from the minimum to maximum amount.trust in the gyzstan is important as ethnicity captures one of the president increases by 2.8 points on a seven-point scale most salient political divides in the country.It serves These results are robust against different ways to mea- somewhat as a proxy for partisanship in a context with sure changes in remitted income.different estimation a traditionally weak party system,and where ethnic and methods and different model specifications(see Tables clan divisions are very important(Fumagalli 2016).We C.4-C.7 in the SI). also control for other sources of income or wealth,such Still we might be concerned that changes in the Kyr- as being in paid employment,household income and a gyz economy could be driving both the changes in re- wealth index.Summary statistics of all variables used mittances and incumbent approval.To deal with this in the analysis of the Lik data and question wordings concern,we employ an instrumental variables (IV)re- are provided in Tables A.2-A.3 of the SI. gression.As an instrument,we use annual change in Our dataset pools observations for respondents unemployment in Russia,the major destination coun- nested in households across the four different waves. try for Kyrgyz migrants,interacted with (or weighted To deal with both the temporal and nested data.we em by)the share of women in each household.The share ploy two different estimation strategies.First,we per- of female household members is a key household leve form a panel data generalized least squares(GLS)es- characteristic correlated with the receipt and amount timation with household and panel wave fixed effects of remittances,but not with incumbent approval.The as well as random effects varying across individuals instrument we employ incorporates the idea,common Second,we use a hierarchical linear model (HLM)to in previous studies,that growth in the migrant host 。101g deal with the fact that individuals are nested in house- country is likely to be a key driver of remittances(e.g. holds and waves (Snijders and Bosker 2012).We esti- Barajas et al.2009;Singer,2012).The results,which mate a model consisting of two levels,one is the respon- are reported in Table D.1 of the SI,show that remit- dent level and the other is a household*wave level.The tance effects on approval remain robust,even when we HLM results are reported in Tables C.4,C.8 and C.11 in instrument remittance amounts using annual changes the SI.In both estimations,we regress changes in trust in unemployment in Russia weighted by the share of in the president on changes in remittances.To check women in the household. the robustness of our results,we also employ nearest Before turning to the analysis of the mechanism driv- neighbor matching(NN matching)based on our di- ing the connection between changes in remittances and chotomous measure of a decline in remittances.These approval,we investigate how a decline in remittances results are reported in Tables C.6,C.7,C.10,C.13 and stacks up against other shocks that individuals face.We C.14 of the SI,and show that the effect of remittances do so by comparing the effect of experiencing a reduc- remain robust even when we match respondents on a tion in remittances on incumbent approval against the series of covariates that could predict their susceptibil- effects of other adverse income shocks that individuals ity to experiencing a decline in remittances in the first may experience,such as the effect of having suffered a place. loss in agricultural income or being affected by land- slides.Respondents in the LiK surveys were asked if they had suffered agricultural loss,for example through diseases in crop or livestock,or were affected by a land- L slide.The variables Reduction in Remittances,Agricul- tural Loss and Affected by Landslides take on a value of 5 In the LiTS II survey of 2010,measures of trust are highly cor- 1 when respondents experienced this kind of shock and related with evaluations of government performance.The bivariate correlation between government approval and trust in the national a value of 0 if not.While 28.2 percent of respondents government is 0.5,statistically significant at the 0.01 level. who received remittances across the four waves stated 766

Katerina Tertytchnaya et al. Our main dependent variable asks respondents how much they generally trust the president. Relying on this item, we construct a variable, presidential trust, which ranges from 1 to 4, with higher values denot￾ing greater trust in the president. In line with other work, we use trust in the incumbent, here the president, as a proxy of incumbent approval (e.g. Williams 1985, Ahmed 2017).5 Based on this measure we construct a variable Change in Trust in the President t-(t-1) by sub￾tracting the trust in the president at wave t-1 from trust in the president at wave t. This variable ranges from a minimum value of -3 and a maximum value of 3. Over￾all, we expect to find a positive effect for a change in the amount and the frequency of remittances received or in the Remittance Index, and a negative effect for reduc￾tions in remittances on change in trust in the president. The analyses also include a set of control variables, including gender, age, education, marital status, ethnic￾ity, intention to migrate, life satisfaction and attitude to risk. Controlling for ethnicity in the context of Kyr￾gyzstan is important as ethnicity captures one of the most salient political divides in the country. It serves somewhat as a proxy for partisanship in a context with a traditionally weak party system, and where ethnic and clan divisions are very important (Fumagalli 2016).We also control for other sources of income or wealth, such as being in paid employment, household income and a wealth index. Summary statistics of all variables used in the analysis of the LiK data and question wordings are provided in Tables A.2-A.3 of the SI. Our dataset pools observations for respondents nested in households across the four different waves. To deal with both the temporal and nested data, we em￾ploy two different estimation strategies. First, we per￾form a panel data generalized least squares (GLS) es￾timation with household and panel wave fixed effects as well as random effects varying across individuals. Second, we use a hierarchical linear model (HLM) to deal with the fact that individuals are nested in house￾holds and waves (Snijders and Bosker 2012). We esti￾mate a model consisting of two levels, one is the respon￾dent level and the other is a household∗wave level. The HLM results are reported in Tables C.4, C.8 and C.11 in the SI. In both estimations, we regress changes in trust in the president on changes in remittances. To check the robustness of our results, we also employ nearest neighbor matching (NN matching) based on our di￾chotomous measure of a decline in remittances. These results are reported in Tables C.6, C.7, C.10, C.13 and C.14 of the SI, and show that the effect of remittances remain robust even when we match respondents on a series of covariates that could predict their susceptibil￾ity to experiencing a decline in remittances in the first place. 5 In the LiTS II survey of 2010, measures of trust are highly cor￾related with evaluations of government performance. The bivariate correlation between government approval and trust in the national government is 0.5, statistically significant at the 0.01 level. RESULTS Models 1 through 3 in Table 2 explore the relationship between changes in remittances and changes in incum￾bent support. The dependent variable in Models 1 to 3 is the difference in levels of trust in the President across survey waves, while our measure of changes in remit￾tances differs across models. Model 1 shows the results for changes in the amount of remitted income, Model 2 the results for changes in the frequency with which respondents receive remittances, and Model 3 the re￾sults for changes in our index. All results are based on a panel data model that accounts for repeated ob￾servations of individuals and includes both household and survey wave fixed effects. The results show that an increase in remittances coincides with an increase in trust in the president, while a decrease in remittances decreases trust in the president. For example, when a respondent experiences a change in remitted income from the minimum to maximum amount, trust in the president increases by 2.8 points on a seven-point scale. These results are robust against different ways to mea￾sure changes in remitted income, different estimation methods and different model specifications (see Tables C.4-C.7 in the SI). Still we might be concerned that changes in the Kyr￾gyz economy could be driving both the changes in re￾mittances and incumbent approval. To deal with this concern, we employ an instrumental variables (IV) re￾gression. As an instrument, we use annual change in unemployment in Russia, the major destination coun￾try for Kyrgyz migrants, interacted with (or weighted by) the share of women in each household. The share of female household members is a key household level characteristic correlated with the receipt and amount of remittances, but not with incumbent approval. The instrument we employ incorporates the idea, common in previous studies, that growth in the migrant host country is likely to be a key driver of remittances (e.g. Barajas et al. 2009; Singer, 2012). The results, which are reported in Table D.1 of the SI, show that remit￾tance effects on approval remain robust, even when we instrument remittance amounts using annual changes in unemployment in Russia weighted by the share of women in the household. Before turning to the analysis of the mechanism driv￾ing the connection between changes in remittances and approval, we investigate how a decline in remittances stacks up against other shocks that individuals face.We do so by comparing the effect of experiencing a reduc￾tion in remittances on incumbent approval against the effects of other adverse income shocks that individuals may experience, such as the effect of having suffered a loss in agricultural income or being affected by land￾slides. Respondents in the LiK surveys were asked if they had suffered agricultural loss, for example through diseases in crop or livestock, or were affected by a land￾slide. The variables Reduction in Remittances, Agricul￾tural Loss and Affected by Landslidestake on a value of 1 when respondents experienced this kind of shock and a value of 0 if not. While 28.2 percent of respondents who received remittances across the four waves stated 766 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:04, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000485

When the Money Stops TABLE 2.Changes in Remittances and Changes in Trust in the President, Kyrgyzstan Panel Data Change in Trust in President() COVARIATES Model(1) Model(2) Model(3) Change in Amount of 0.048* Remittances t-(t-1) (0.019) Change in Frequency of 0.070* Remittances t-(t-1) (0.032) Change in Remittances 0.064** Index H(t-1) (0.023) Primary Education 0.252 0.294 0.242 (0.412) (0.411) (0.412) Secondary Education 0.421 0.433 0.423 (0.397 (0.396) (0.397) University Education 0.512 0.524 0.524 (0.432) (0.430) (0.432) Gender -0.031 -0.026 -0.031 (0.074) (0.074) (0.074) Age 0.008** 0.008** 0.008** (0.003) (0.003) (0.003) Married -0.042 -0.075 -0.060 (0.110) (0.110) (0.110) Ethnicity 0.121 0.142 0.147 (0.502) (0.500) (0.502) Employed -0.014 -0.058 -0.032 (0.111) (0.111) (0.110) Intention to Migrate -0.047 -0.078 -0.085 (0.174) (0.173) (0.174) Wealth Index -0.014 -0.009 -0.012 (0.018) (0.018) (0.018) Household Income -0.001* -0.001 -0.0005* (0.0003) (0.000) (0.0003) Life Satisfaction 0.070* 0.064* 0.069** (0.024) (0.025) (0.024) Risk Attitude 0.023 0.019 0.026 (0.018) (0.018) (0.018) Constant 0.274 0.218 0.247 (1.065) (1.060) (1.063) Fixed Effects Household √ Survey Wave Observations(Individuals. 1.287 1.273 1.287 Groups) 866 864 866 R2 Between 0.59 0.58 0.59 Notes:Models 1 through 3 present regression coefficients with standard errors in parentheses based on a panel GLS estimation with random effects varying across individuals and household and wave fixed effects. Being illiterate is the reference category for education.For robustness check,see Tables C.4-C.7 of the Sl. Significant at the*p≤0.01，+p≤0.05，*p≤0.10 level.Source:Life in Kyrgyzstan Panel Survey,.2010- 2013. that they had experienced a decline in remittances. or agricultural loss.This underscores the importance of 12.7 percent reported that they lost income due to agri- reductions in remittances for incumbent approval. cultural loss,and 11.6 percent were adversely affected Our argument suggests that recipients who experi- by landslides.We regress changes in trust in the presi- ence a decline in remittances become less satisfied with dent on these household income shocks,while control- their economic situation,thereby undermining their ling for the full set of covariates introduced in Table 2. support for the incumbent.Conversely,when remit- Full results are reported in Table B.2 in the SI.Figure 3 tances increase,the economic evaluations of recipi- M//:sdny graphically displays the size of the effects.Importantly, ents will improve,resulting in more support for the the figure shows that the effect of a reduction in re- incumbent.To test this mechanism with LiK data,we mittances is of similar size to the effect of a landslide rely on respondents'answers to the following question 767

When the Money Stops TABLE 2. Changes in Remittances and Changes in Trust in the President, Kyrgyzstan Panel Data Change in Trust in President t-(t-1) COVARIATES Model (1) Model (2) Model (3) Change in Amount of 0.048∗∗ Remittances t-(t-1) (0.019) Change in Frequency of 0.070∗∗ Remittances t-(t-1) (0.032) Change in Remittances 0.064∗∗∗ Index t-(t-1) (0.023) Primary Education 0.252 0.294 0.242 (0.412) (0.411) (0.412) Secondary Education 0.421 0.433 0.423 (0.397) (0.396) (0.397) University Education 0.512 0.524 0.524 (0.432) (0.430) (0.432) Gender − 0.031 − 0.026 − 0.031 (0.074) (0.074) (0.074) Age 0.008∗∗∗ 0.008∗∗∗ 0.008∗∗∗ (0.003) (0.003) (0.003) Married − 0.042 − 0.075 − 0.060 (0.110) (0.110) (0.110) Ethnicity 0.121 0.142 0.147 (0.502) (0.500) (0.502) Employed − 0.014 − 0.058 − 0.032 (0.111) (0.111) (0.110) Intention to Migrate − 0.047 − 0.078 − 0.085 (0.174) (0.173) (0.174) Wealth Index − 0.014 − 0.009 − 0.012 (0.018) (0.018) (0.018) Household Income − 0.001∗∗ − 0.001 − 0.0005∗ (0.0003) (0.000) (0.0003) Life Satisfaction 0.070∗∗∗ 0.064∗∗ 0.069∗∗∗ (0.024) (0.025) (0.024) Risk Attitude 0.023 0.019 0.026 (0.018) (0.018) (0.018) Constant 0.274 0.218 0.247 (1.065) (1.060) (1.063) Fixed Effects Household √√√ Survey Wave √√√ Observations (Individuals, 1,287 1,273 1,287 Groups) 866 864 866 R2 Between 0.59 0.58 0.59 Notes: Models 1 through 3 present regression coefficients with standard errors in parentheses based on a panel GLS estimation with random effects varying across individuals and household and wave fixed effects. Being illiterate is the reference category for education. For robustness check, see Tables C.4-C.7 of the SI. Significant at the ∗∗∗ p ≤ 0.01, ∗∗ p ≤ 0.05, ∗ p ≤ 0.10 level. Source: Life in Kyrgyzstan Panel Survey, 2010– 2013. that they had experienced a decline in remittances, 12.7 percent reported that they lost income due to agri￾cultural loss, and 11.6 percent were adversely affected by landslides. We regress changes in trust in the presi￾dent on these household income shocks, while control￾ling for the full set of covariates introduced in Table 2. Full results are reported in Table B.2 in the SI. Figure 3 graphically displays the size of the effects. Importantly, the figure shows that the effect of a reduction in re￾mittances is of similar size to the effect of a landslide or agricultural loss. This underscores the importance of reductions in remittances for incumbent approval. Our argument suggests that recipients who experi￾ence a decline in remittances become less satisfied with their economic situation, thereby undermining their support for the incumbent. Conversely, when remit￾tances increase, the economic evaluations of recipi￾ents will improve, resulting in more support for the incumbent. To test this mechanism with LiK data, we rely on respondents’ answers to the following question 767 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:04, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000485